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52 3 From Relief to Rehabilitation Although the U.S.-funded relief program ended in 1996, external aid to the Kurdistan Region continued under the OFFP. Ongoing assistance provided the necessary external patronage and international support to help keep the Kurdish quasi-state alive, as well as to encourage political stability, institution building, and new forms of revenue generation. Over time, the aid program engaged in reconstruction and attempted to develop industries and local infrastructure . More expansive trade emerged within the region and across borders that generated new forms of wealth. Even then, the OFFP, like the first relief program , supported the territorial integrity of Iraq and not the self-sustainability of the Kurdistan Region. It remained committed to the one-Iraq policy, which hindered capacity building and kept the region isolated, underdeveloped, and without internal sovereignty in the Iraqi state. In the absence of official commercial transactions and with continued authoritarian rule in Baghdad, no positive relationship could develop between the KRG and the central government. The ties that emerged across regions were largely based on tutelage and toleration, without any mechanisms of mutual support or integration. The OFFP Period Like the first relief phase, the OFFP provided the Kurdish quasi-state with important services and revenues that alleviated the immediate effects of the double embargo and permitted economy recovery. The OFFP was an agreement or compromise made by the UN sanctions committee in New York that permitted the Iraqi government to sell increasing but limited amounts of petroleum for food and humanitarian needs of civilian populations. Under the program, which was implemented in thirteen six-month phases, the northern region—territories From Relief to Rehabilitation | 53 above the U.N. demarcation line—was targeted to receive 13 percent of the proceeds of Iraqi oil sales for humanitarian goods (Graham-Brown 1999, 275–77). As in the first aid period, the program placed particular attention on the special rehabilitation needs of the three northern governorates. Although the OFFP allocated 59 percent of its revenues to central and southern Iraq, the cash component provided 35 percent more per capita to the Kurdish north than to the rest of the country. UNICEF, for instance, had its largest budget and highest annual procurement in the northern region (UNICEF 1998; UNICEF 2002, 16; FAO 2002, 1). The program also permitted ongoing security assistance. The U.S. government terminated its humanitarian relief support in August 1996 but assured ongoing security protection to the Kurds by transitioning OPC II to Operation Northern Watch. The difference, however, was in the nature and scope of the OFFP. In contrast to the first relief phase, whereby donor agencies and foreign governments had limited political engagement with the KRG and its rival parties, after 1996 external actors became increasingly involved in stabilizing the Kurdish north as a means of checking the influence of Saddam Hussein. In support of ongoing efforts by Kurdish officials and under the guidelines set by the Ankara peace process, the U.S. government brokered the Washington Agreement in September 1998 that officially terminated the Kurdish civil war (Stansfield 2003a, 100). Tensions remained between the parties; however, the agreement helped create the conditions of relative stability by officially dividing the KRG into two administrations controlled by the KDP and PUK in Arbil and Suleymaniya governorates , respectively. Even after the civil war ended, UN officials negotiated ongoing disputes between the parties and quelled potential conflicts. They taught principles of good governance, negotiation, and administration by conducting regular meetings with KRG representatives and incorporating local personnel into legitimate bodies. KRG representatives and local populations that liaised with the UN gained professional experience and language skills, while learning about the policies and protocols of international organizations. In contrast to the first relief phase, whereby resources were insufficient to address local needs, the OFFP had excess money chasing needs. Aid revenues and services allocated to the Kurdistan Region increased exponentially, from 1 billion during the first relief program to nearly US$10 billion during the OFFP. Approximately US$29 million was initially targeted to the Kurdistan Region, with the 54 | The Kurdish Quasi-State first shipment commencing in March 1997.1 The region also was allocated the interest on unspent funds of oil sale proceeds and gains on currency exchange. From this amount revenues were allocated to different sectors, the majority of which centered on food and medicines, but which also included agriculture, education , water and sanitation, de-mining, and electricity (Natali 2007c). Indeed, the OFFP was corrupt and incomplete...


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